Lottery insurance method

ABSTRACT

A method of conducting a lottery wherein lottery participants may choose to purchase insured lottery tickets is disclosed. The insurance purchased with an insured ticket guarantees that if the insured ticket turns out to be a winning ticket, the purchaser is entitled to his share of the jackpot immediately, rather than being forced to accept a smaller amount immediately or the full amount in installments over time. In a particular embodiment, insurance may be purchased that guarantees a winner will immediately be paid, in addition to his share of the jackpot, an additional amount equal to at least a portion of the income or other taxes payable on the jackpot.

BACKGROUND OF THE INVENTION

1. Technical Field

This invention generally relates to lotteries, and more specificallyrelates to insurance sold in connection with lottery tickets.

2. Background Art

A lottery, in a broad sense, is a way of distributing prizes, includingmonetary awards, by chance or luck. One popular lottery format requiresparticipants to risk a relatively small amount of money, often bypurchasing a lottery ticket, in exchange for the chance to win a muchlarger sum of money. Conventional lottery tickets are associated withcombinations of numbers, either pre-selected or chosen at the time ofpurchase, and winning tickets are those whose number combinations eithercompletely or partially match a winning number combination. Tickets withcomplete matches are conventionally awarded a much larger prize than aretickets with partial matches. The maximum prize awarded for a completelymatching number combination is often referred to as a jackpot. In thisdescription of the invention, however, the word “jackpot” means anyprize above a cutoff point, as defined below.

It is conventional for lottery operators to award a jackpot to a lotterywinner only if the winner is willing to accept multiple installmentpayments consisting of portions of the total payout over a payoutperiod. Payout periods of 20 or 25 years are not uncommon. If thejackpot winner elects not to receive installment payments, the onlyconventionally available alternative is to receive a lump sum paymentimmediately upon winning, where the lump sum payment is significantlyless than the jackpot. This may be referred to as selecting a cashoption. It is not unusual for the lump sum payment immediately availableto jackpot winners—the cash option—to be no greater than half or roughlyhalf of the jackpot amount. As used herein, the word “immediately,” whenused to describe the timing for payment of lottery winnings, meanswithin a reasonably short time, e.g., a few days, weeks or months, aftera winning lottery ticket is identified.

It will be readily apparent to one of ordinary skill in the art thatwinners of certain non-jackpot prizes in a conventional lottery may beawarded their full prize amount immediately upon winning. The value ofprizes immediately awarded in full may vary from one lottery to another,with $100,000 being considered a conventional cutoff point: prizes belowthat amount may conventionally be immediately paid in full; prizes abovethat amount may conventionally be subject to the cash option reduction.In this description of the invention, a “large payout” is one whosevalue is above a cutoff point, which may be $100,000 but may also be anyother amount above which the lottery operators are not willing toimmediately proffer full payment. A “small payout” is one whose value isbelow a cutoff point. The jackpot, by definition herein, is a largepayout, i.e., is above the cutoff point for a particular lottery and issubject to the cash option reduction. It is to large payouts that thepresent invention particularly applies, and the phrase “winning ticket”herein means a ticket which is entitled to the jackpot or other largepayout. The phrase “paying ticket” means a ticket that is entitled tosome payout, without regard to whether it is large or small.

Regardless of the payout method selected by a lottery winner, taxes onthe winnings may reduce the amount a winner actually realizes.Furthermore, if more than one lottery participant holds a ticket havingthe winning number combination in a conventional lottery, the amount awinner realizes is further diminished, because the total jackpot staysconstant no matter how many winners there are. Whatever the reason forthem, such reductions in realized prize money are upsetting to manylottery participants who find themselves with less money than they wereanticipating when they purchased a ticket. Even if the lump sumdistribution rules are known in advance to the lottery participants,many winners still experience disappointment at not receiving the fulljackpot immediately upon winning.

Existing lottery methods address other sources of potentialdisappointment on the part of lottery winners. In one method, lotteryparticipants bet that they will not select a winning number combination,but may wager an additional amount to ensure that if they do select acomplete winning combination they will still be granted a prize as ifthey had wagered to win rather than lose. In another method, lotteryparticipants may pay extra for the right to keep playing a lottery evenafter an event that would otherwise knock them out of the game. In stillanother method, lottery players may pay an additional amount to purchasea “never-lose” ticket that remains valid until it wins something,whether it be the jackpot or some smaller prize. None of the existingmethods or inventions, however, address the issue of the inability of alottery winner to immediately collect their share of the jackpotassociated with winning a lottery.

SUMMARY OF THE INVENTION

Therefore, there exists a need for a method of operating a lottery thatallows lottery participants to collect their share of the jackpotimmediately upon winning it. The present invention fills that need byproviding a method of conducting a lottery wherein lottery participantsmay choose to purchase insured tickets. The insurance purchased with aninsured ticket guarantees that even if the insured ticket is alarge-payout winning ticket, the purchaser is entitled to the jackpot orother large payout, as applicable, immediately, rather than being forcedto accept a smaller amount up front or the full amount in installmentsover time. As has been previously mentioned, in this description of theinvention, the word “jackpot” may in various places represent any largepayout, i.e., any prize too large to be available for immediate paymentin full. In a particular embodiment, insurance may be purchased thatguarantees a winner will immediately be paid, in addition to his shareof the jackpot, an additional amount equal to at least a portion of theincome taxes or other taxes payable on the jackpot.

The present invention addresses potential disappointment on the part ofa lottery winner in regard to the collection of prize money. Theinvention also provides an avenue for lottery operators to offer anadditional service to lottery participants in return for increasedrevenue. The invention may also encourage participation in the lotteryby some players who would not participate in a conventional lottery,thus further increasing revenue.

BRIEF DESCRIPTION OF THE DRAWINGS

The foregoing and other features and advantages of the invention will beapparent from the following more particular description of specificembodiments of the invention, as illustrated in the accompanyingdrawings, wherein:

FIG. 1 is a flow chart illustrating a method of conducting a lotteryaccording to an embodiment of the present invention;

FIG. 2 is a view of a lottery option selection sheet configuredaccording to an embodiment of the present invention; and

FIG. 3 is a view of a lottery ticket configured according to anembodiment of the present invention.

DETAILED DESCRIPTION OF EMBODIMENTS OF THE INVENTION

Referring now to the figures, and in particular to FIG. 1, a method 10of conducting a lottery according to the present invention includessteps 12 through 24. In a first step 12, a lottery jackpot isdetermined. The ways in which this may be done are well known in theart. Both fixed jackpots and increasing jackpots are common. Often, theaward amounts are arbitrarily selected to be round numbers, e.g. fivemillion, but amounts of any size, chosen upon any basis, are possible.

It is conventional, for example, to select an arbitrary, fixed jackpot,perhaps five million dollars, that is large enough to attract interestin the lottery. After a period set aside for ticket sales, a winningnumber combination is selected, perhaps by a random number generator, bya hand drawing, or some other method known in the art. A winning numbercombination may also have been secretly selected at some earlier time.If a lottery participant has a ticket with a winning combination, thejackpot may be presented to that participant. If no one has chosen thewinning combination, the lottery may conclude with no prize awarded.Alternatively, the jackpot may be rolled over into a new lottery andfurther ticket sales may be conducted towards a future lottery with thesame or an increased jackpot.

In a second step 14, it is determined whether there are any winninglottery tickets that have not yet been cashed. An uncashed ticket is onethat has not yet received any payout amount it is entitled to.Generally, the lottery operators designate a period of time during whichwinning and other paying tickets may be cashed, and beyond which alltickets are void. If, during the eligibility period, there are suchuncashed tickets, the process continues to a third step 16, where thenext uncashed winning ticket is identified. If no uncashed winningticket exists, or if the eligibility period expires, the processproceeds to a final step 24, and concludes. In some instances, thisconcluding outcome will occur because no lottery participant hasselected a winning number combination, and there will thus be no winningticket at all. In other instances the outcome will occur because allwinning tickets, whether one or more than one, have been cashed and theprize money paid in an earlier iteration of process 10. In still otherinstances, one or more paying tickets may not be cashed at all.

A lottery ticket is a paying ticket if it reflects a winning numbercombination determined by the lottery operator. As will be more fullyexplained in connection with FIGS. 2 and 3, the winning combination maybe a series of numbers, perhaps in a particular order. In some lotteriesit is conventional for lottery tickets having some but not all of thewinning numbers to be eligible for prizes in amounts less than thejackpot. These lesser amounts may be either large or small payouts, asdefined herein.

In a next step 18, it is determined whether the next uncashed winningticket identified in step 16 has been insured. This insurance will bediscussed in greater detail in connection with FIG. 2. For at leastthose winners with non-insured tickets, all winning tickets must becollected or the eligibility period must end before the reduced prizeamount for each winner can be determined. If the ticket is insured, astep 20 is reached, wherein the ticket holder is immediately paid atleast his share of the jackpot determined in step 12, based upon theinsurance purchased: the jackpot if the ticket is payout insured; thejackpot plus an additional amount representing at least a portion of thetaxes payable on the jackpot if the ticket is tax insured. In thisdescription of the invention, the word “immediately,” when used todescribe the timing for payment of lottery winnings, means within areasonably short time, e.g., a few days, weeks or months, after awinning lottery ticket is identified.

If the ticket is not insured, step 20 is bypassed in favor of a step 22.Thereupon, a reduced amount is paid to the holder of the ticket. Thereduced amount is less than the jackpot, and may be, for example,approximately half of the full jackpot. Steps 20 and 22 lead back tostep 14, from which point the process either terminates or continuesthrough another iteration, until all winning tickets are cashed.

Referring now to FIG. 2, a lottery option selection sheet 26 includes apayout insurance option region 28 and a tax insurance option region 32.A yes box 30 is associated with region 28 and a yes box 34 is associatedwith region 32. A lottery participant, after obtaining a lottery optionselection sheet 26, may elect to purchase payout insurance by soindicating in box 30. The indication may be made by initialing in box30, by darkening it or filing it in, or by some other act.

According to the present invention, the payout insurance that may beoffered for sale in connection with lottery option selection sheet 26may guarantee to the insurance purchaser that in the event he holds awinning ticket, he will immediately be paid his share of the jackpot. Inexisting lotteries, winning participants cannot immediately collecttheir share of the jackpot because lottery operators offer lotterywinners a choice between only two options: receiving the jackpot inpartial payments spread out over time; or receiving an immediate paymentin a reduced amount totaling much less than the jackpot. Conventionally,the partial payments are spread out over a payout period consisting ofmany years, with 20- and 25-year payout periods being common, and thereduced amount available for immediate payment is conventionally onlyhalf the jackpot. This lottery operating method may sparkdisappointment, frustration, or anger in lottery winners, and maydiscourage potential lottery participants from participating in thelottery at all.

Conventionally, lottery payout amounts remain constant regardless of thenumber of lottery participants who select the associated winning numbercombination. Not every lottery or every prize will have multiplewinners, of course, but those that do cause each such prize to be splitamong each winner, thus reducing the amount each winner receives. In oneembodiment of the present invention, the price of payout insurance maybe adjusted so as to allow the lottery operators to immediately pay thefull amount of a prize, whether a large payout or a small payout, toeach winner of such large or small payout, regardless of the number ofsuch winners.

A further source of potential disappointment for lottery winners is theprospect of paying taxes on the winnings. To mitigate this eventuality,a lottery participant may select tax insurance by so indicating in box34 of tax insurance option region 32. The purchase of tax insuranceguarantees that a lottery winner will immediately be paid his share ofthe jackpot plus an additional amount that represents at least a portionof the taxes payable on the jackpot. This amount may be any portion atall, but in one embodiment may be sufficient to pay all or significantlyall Federal income taxes due on their jackpot winnings. In anotherembodiment it may be sufficient to pay all or significantly all Federaland State income taxes, and in other embodiments it could be half of allFederal income taxes, or of all Federal and State taxes of any kind.Other portions or percentages of these or other kinds of taxes are alsopossible.

The phrase “tax insured lottery ticket” herein means a lottery ticketthat carries both tax insurance and payout insurance. It should beunderstood, however, that in at least one embodiment of the invention,tax insurance may be purchased separate from payout insurance. Thephrase “insured lottery ticket” means a lottery ticket for which atleast one form of either tax insurance or payout insurance has beenpurchased.

The lottery insurance method of the present invention may be used inconnection with lotteries of any kind, without regard to the specificmanner of selecting options, such as insurance type and numbercombinations, or to other lottery details such as jackpot size, totalticket sales, frequency or method of determining a winning numbercombination, or any other lottery detail. Referring still to FIG. 2,certain details and procedures conventional to lotteries will bedescribed, by way of illustration and not of limitation. A number region36 contains a plurality of number boxes 38. Each number box 38 containsa playing symbol 40. In one embodiment, playing symbol 40 may be a wholenumber between 1 and 49. In other embodiments, different numbers,different symbols, or different numbers of symbols, are possible. Aselected number box 42 contains a selected playing symbol 43 that hasbeen chosen by a lottery participant as part of a number combination. Inthe illustrated embodiment, there are six selected number boxes, eachcontaining one selected playing symbol 43. In other embodiments, more orfewer boxes may be selected. An information region 44 may containinformation about the lottery operator, such as the name of a particularstate, along with any other information relative to the lottery.

After a lottery participant makes use of lottery option selection sheet26 to select an appropriate number of playing symbols 40, and toindicate whether insurance is desired, and of what type, lottery optionselection sheet 26 may be returned to a vendor with payment in exchangefor a lottery ticket 46 (see FIG. 3). The amount of the payment requiredmay depend in part on the options selected. It may also depend on otherfactors such as vendor location, the level of public interest in thelottery, the projected number of lottery participants, and otherfactors. Alternatively, an electronic equivalent of lottery optionselection sheet 26 may be used to collect similar information andautomatically calculate the payment amount. The price of lottery ticket46, and how it may be determined, will be further discussed inconnection with FIG. 3.

A vendor to which lottery option selection sheet 26 is presented mayobtain therefrom the information needed to create lottery ticket 46 inany one of a number of ways. For example, the vendor could visually scanlottery option selection sheet 26 in order to figure out what optionsand playing symbols 40 have been selected, then transform thatinformation into a format readable by a computer or printer which wouldthen generate lottery ticket 46. Alternatively, a scanning device couldread lottery option selection sheet 26 and then transmit the relevantinformation to a printer for creation of lottery ticket 46. Otheroptions for obtaining information from lottery option selection sheet 26may also be available, as will be readily apparent to one of ordinaryskill in the art.

In FIG. 3, lottery ticket 46 contains a number combination 48 made up ofselected playing symbols 43. In the illustrated embodiment, numbercombination 48 includes six selected playing symbols 43, but in otherembodiments more or fewer selected playing symbols 43 may be used. At atime determined by the lottery operators, a winning number combinationmay be determined, in one or another manner well known to those ofordinary skill in the art, after which time the holder of lottery ticket46 may compare number combination 48 to the winning number combination.If a required number of selected playing symbols 43 match a playingsymbol included in the winning number combination, lottery ticket 46 isa winning lottery ticket, and may be presented to the lottery operatorsin return for payment of the appropriate prize amount.

Lottery ticket 46 may further contain an identifier 50, a ticket number52, a date 54, and a price 56. Identifier 50 may convey various types ofinformation about lottery ticket 46, or about the lottery it represents.Identifier 50 may, for example, convey information about the identity ofthe lottery operator, but any other type of information is alsopossible. Ticket number 52 may serve, for example, to distinguishlottery ticket 46 from all other existing lottery tickets, or from allother lottery tickets sold in conjunction with a particular lottery, orwithin a particular period. Ticket number 52 may thus comprise a numberalone, a number combined with letters or other symbols, or some otherdistinguishable group of characters. Date 54 may indicate the date onwhich lottery ticket 46 was purchased, the date on which the winningnumber combination is to be determined, the date by which a winninglottery ticket must be cashed, or any other applicable date. Price 56may indicate the price paid for lottery ticket 46, and may also indicatewhether payout insurance or tax insurance has been purchased for lotteryticket 46, as will be further described below.

Price 56 for lottery ticket 46 may be determined in accordance with anyknown pricing method. Such pricing methods may take into account theprojected number of lottery tickets that will be sold in a given period,the projected number of lottery participants that will purchase payoutinsurance or tax insurance, the jackpot, and other factors. One pricingmethod is set forth in U.S. Pat. No. 6,086,477, entitled METHODS ANDAPPARATUS WHEREIN A LOTTERY ENTRY IS ENTERED INTO LOTTERY DRAWINGS UNTILTHE LOTTERY ENTRY IS IDENTIFIED AS A WINNER, issued Jul. 11, 2000 toWalker et al., and which is incorporated herein by reference. Otherpricing methods may also exist, and any pricing method now known ordeveloped in the future is a possible method appropriate for use inconnection with the present invention.

Price 56 may be observed by a lottery participant, a vendor, a lotteryoperator, or other person in order to determine whether payout insuranceor tax insurance has been purchased in connection with lottery ticket46. For example, the prices of a non-insured, a payout insured, and atax insured lottery ticket may be known to the observer of lotteryticket 46. By comparing price 56 to the known prices for each type ofticket, the insurance status of lottery ticket 46 may be easilydetermined. In some embodiments of the present invention, the type ofinsurance, if any, purchased with lottery ticket 46 may be determined insome other way. For example, lottery ticket 46 may be marked or alteredin some recognizable way corresponding to the insurance purchased. Thiscould entail a physical marking of the ticket, perhaps with ink oranother permanent substance, the storing of ticket number 52 in adatabase for future retrieval, the sale of tickets wherein differentsizes, colors, shapes, or other characteristics correspond to aparticular insurance level, or some other method.

In one embodiment of the invention, a non-insured lottery ticket may beupgraded to an payout insured lottery ticket by paying a first upgradeprice. This may be referred to as a payout insurance upgrade. Similarly,a payout insured ticket may be upgraded to a tax insured ticket bypaying a second upgrade price. This may be referred to as a taxinsurance upgrade. Such upgrades may, in one embodiment, be made until acutoff time, where the cutoff time may precede the time at which thewinning number combination is determined. In one embodiment, the firstupgrade price is equal to the difference between the price of anon-insured and a payout insured ticket, while the second upgrade priceis equal to the difference between a payout insured and a tax insuredticket. In another embodiment, the first and second upgrade prices mayincrease as the cutoff time approaches. In other embodiments, some otherpricing scheme may apply.

The foregoing description has described selected embodiments of a methodof conducting a lottery wherein lottery participants may choose topurchase insured lottery tickets. The insurance purchased with a payoutinsured ticket guarantees that if the payout insured ticket turns out tobe a winning ticket, the purchaser is entitled to his share of the fulljackpot immediately, rather than being forced to accept either a smalleramount immediately or the jackpot in installments over time. In aparticular embodiment, tax insurance may be purchased that guarantees awinner will immediately be paid, in addition to his share of thejackpot, an additional amount equal to at least a portion of the incomeor other taxes payable on the jackpot.

While the invention has been particularly shown and described withreference to selected embodiments thereof, it will be readily understoodby one of ordinary skill in the art that, as limited only by theappended claims, various changes in form and details may be made thereinwithout departing from the spirit and scope of the invention.

1. A method of conducting a lottery comprising the steps of: (1)determining a jackpot prize for a lottery game in which ticketpurchasers select at least one number combination for each lotteryticket purchased; (2) offering non-insured tickets for the lottery gameto ticket purchasers at a first price, and tax insured tickets for thelottery game to ticket purchasers at a second price higher than thefirst price; (3) paying a first amount to each holder of a non-insuredwinning lottery ticket, said first amount equal to said ticketpurchaser=s share of said jackpot; and (4) paying a second amount toeach holder of a tax insured winning lottery ticket, said second amountequal to said ticket purchaser=s share of said jackpot plus at least aportion of the taxes payable on said ticket purchaser=s share of saidjackpot.
 2. The method of claim 1 wherein said second payout time occursimmediately after said insured winning lottery ticket is identified. 3.The method of claim 1 further including the step of offering a taxinsurance upgrade for sale at a first upgrade price to a purchaser of anon-insured lottery ticket, said tax insurance upgrade converting saidnon-insured lottery ticket to a tax insured lottery ticket, said taxinsurance upgrade available for purchase until a cutoff time, saidcutoff time prior to said payout time.
 4. The method of claim 3 whereinsaid first upgrade price is equal to the difference between said firstprice and said second price.
 5. The method of claim 3, further includingthe step of offering a payout insurance upgrade for sale at a secondupgrade price to a purchaser of one of said tax insured lottery ticketsand said non-insured lottery tickets, said payout insurance upgradeconverting said tax insured lottery ticket or said non-insured lotteryticket to a payout insured lottery ticket, said payout insurance upgradeavailable for purchase until said cutoff time.
 6. A method of conductinga lottery comprising the steps of: (1) distributing lottery tickets tolottery participants for a lottery game, said tickets for the lotterygame including tax insured tickets and non-tax insured tickets; (2)determining whether a particular ticket is a paying ticket for thelottery game; (3) paying the award amount plus an additional amountequal to at least a portion of the taxes payable on the award amount ifthe paying ticket is tax insured; and (4) paying the award amountwithout an additional amount for taxes if the paying ticket is non-taxinsured.
 7. The method of claim 1 further including the step of offeringa tax insurance upgrade for sale at a first upgrade price to a purchaserof a non-insured lottery ticket, said tax insurance upgrade convertingsaid non-insured lottery ticket to a tax insured lottery ticket, saidtax insurance upgrade available for purchase until a cutoff time, saidcutoff time prior to said payout time.
 8. The method of claim 7, furtherincluding the step of offering a payout insurance upgrade for sale at asecond upgrade price to a purchaser of one of said tax insured lotterytickets and said non-insured lottery tickets, said payout insuranceupgrade converting said tax insured lottery ticket or said non-insuredlottery ticket to a payout insured lottery ticket, said payout insuranceupgrade available for purchase until said cutoff time.
 9. A method ofconducting a single lottery game comprising the steps of: (1) sellingtax-insured and non-tax insured lottery tickets for a single lotterygame in which ticket purchasers select at least one number combinationfor each lottery ticket purchased within the single lottery game; (2)awarding to a holder of a tax-insured paying ticket an amount equal tothe prize amount plus an amount equal to at least a portion of the taxesfor the prize; and (3) awarding to a holder of a non-tax-insured payingticket an amount equal to the prize amount without any additional amountfor taxes.
 10. The method of claim 9, further including the step ofoffering a tax insurance upgrade for sale at a tax insurance upgradeprice to a purchaser of a non-tax insured lottery ticket, said taxinsurance upgrade converting said non-tax insured lottery ticket to atax insured lottery ticket.